12 May 2011

Costs: Westwood v Knight

The importance of Westwood v Knight [2011] EWPCC 11 (11 May 2011) is that it was the first trial under the new rules for the Patents County Court and thus the first opportunity for the court to consider the cost capping rules in the context of an entire case. The trial, which I blogged in my IP North West blog because the defendant came from Manchester, was an action for infringement of trade marks and copyrights and passing off that had been brought by the well known fashion designer Vivian Westwood.

Judge Birss QC assessed costs against the defendant in the sum of £60,625. That was just over half the £133,533 that the claimant claimed to have incurred. The trial judge promised to give his reasons for his assessment when he made his order and these he delivered on 11 May 2011.

His Honour considered the rules that he had to apply. The general approach to costs is set out in CPR 44.3 but he also had to consider the scale costs for claims in the Patents County Court set out in Section VII of Part 45 of the Civil Procedure Rules. That section imposes limits for each stage of the litigation which I set out in my article on the new Patents County Court Rules on 31 Oct 2010 and the overall £50,000 cap on a party's costs in that court. His Honour concluded:
"The correct approach must be to apply the limits if they can possibly be applied, recognising however that in the end the court always has a discretion as to costs (CPR r44.3) and that includes as to the amount of costs. It is a discretion which in my judgment will very rarely (if ever) be exercised to exceed the limits set by Section VII. For one thing specific exceptions are provided for (r45.41(2)). Furthermore to exercise a discretion on a wider basis in all but the most rare and exceptional case would undermine the very object of the scale in the first place. For the scale to give a measure of certainty to litigants, it has to possible to be sure that the limits will apply well before any costs are incurred and most likely before any action has even commenced. Before they embark on litigation to enforce their intellectual property rights (or defend themselves) the potential users of the Patents County Court system need to be able to make a prediction in advance as to their likely costs exposure. Their legal advisers need to be able to say with confidence that the costs capping provisions can be relied on."
This approach required the judge to consider first whether costs should be paid at all and if so by whom (as in every case); secondly, to assess the costs summarily; and, thirdly, to apply any limit that may be required by Section VII. Thus, he produced a 6-column table:
  • the first column produced a head of costs
  • the second the reference
  • the third the sum actually incurred by the receiving party
  • the fourth the sum assessed,
  • the fifth any cap imposed by CPR Part 45, and finally
  • the sum actually awarded.
Save for an application to amend the particulars of claim, all the costs incurred after transfer to the Patents County Court fell below the Part 45 limits. However, the case had begun in the High Court where the costs are not capped. The costs claimed by the claimants before transfer were £33,069. The judge reduced those on summary assessment to £25,000.

In my article last October I argued that the jurisdiction to award costs off the scale would be applied sparingly and that the court would apply the same considerations as the Intellectual Property Office in similar cases. I am glad to say that Judge Birss QC seems to have applied exactly the same reasoning in this case.

If anyone wants to discuss this case in particular or Patent County Court litigation in general they can contact me on 0800 862 0055 or through my contact form.